Chapter 6R, Problem 14MCQ

To determine

To find:

Relationship shown by Phillips curve.

Explanation of Solution

The Phillips Curve is a fairly straightforward idea. It assesses the trade-off between inflation and unemployment or the link between the two. The unemployment rate decreases with inflation (also known as higher prices for goods and services), whereas it increases with lower inflation (also known as lower prices for goods and services).

Thus, from the above we can conclude that the correct option is B.